Dot.Com has determined that it could issue $1,000 face value bonds with an 8 percent coupon paid semiannually and a five-year maturity at $900 per bond. If Dot.Com’s marginal tax rate is 30 percent, its after-tax cost of debt is closest to:

a. 7.2 percent.

c. 7.6 percent.

b. 7.4 percent.

d. 7.8 percent.